Marvel Parts, Inc., manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 990 hours each month to produce 1,980 sets of covers. The standard costs associated with this level of production are: Total $ 39,798 $ 5,940 Per Set of Covers S 20.10 3.00 Direct materials Direct labor Variable manufacturing overhead (based on direct labor hours) $ 3,168 1.60 $ 24.70 During August, the factory worked only 1,000 direct labor-hours and produced 2,200 sets of covers. The following actual costs were recorded during the month: Direct materials (7,400 yards) Direct labor Variable manufacturing overhead Total $ 40,700 $ 8,140 $ Per Set of Covers $ 18.50 3.70 1.80 $ 24,00 3,960 At standard, each set of covers should require 3.0 yards of material. All of the materials purchased during the month were used in production. Required: 1. Compute the materials price and quantity variances for August 2. Compute the labor rate and efficiency variances for August 3. Compute the variable overhead rate and efficiency variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) I U U 1. Materials price variance Materials quantity variance 2. Labor rate variance Labor efficiency variance 3. Variable overhead rate variance Variable overhead efficiency variance F U F Lane Company manufactures a single product that requires a great deal of hand labor. Overhead cost is applied on the basis of standard direct labor-hours. The budgeted variable manufacturing overhead is $2.20 per direct labor-hour and the budgeted fixed manufacturing overhead is $279,000 per year. The standard quantity of materials is 4 pounds per unit and the standard cost is $3.50 per pound. The standard direct labor-hours per unit is 1.5 hours and the standard labor rate is $12.10 per hour. The company planned to operate at a denominator activity level of 45,000 direct labor-hours and to produce 30,000 units of product during the most recent year. Actual activity and costs for the year were as follows: Actual number of units produced Actual direct labor-hours worked Actual variable manufacturing overhead cost incurred Actual fixed manufacturing overhead cost incurred 36,000 58,500 87,750 321,750 s S Required: 1. Compute the predetermined overhead rate for the year. Break the rate down into variable and fixed elements. 2. Prepare a standard cost card for the company's product. 3a. Compute the standard direct labor-hours allowed for the year's production. 3b. Complete the following Manufacturing Overhead T-account for the year. 4. Determine the reason for any underapplied or overapplied overhead for the year by computing the variable overhead rate and efficiency variances and the fixed overhead budget and volume variances. Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Req 3B Req 4 Complete the following Manufacturing Overhead T-account for the year. Actual costs Manufacturing Overhead 409,500 453,600 Applied costs 0 0 44,100 Overapplied overhead
